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Okta Stock Surges on Raymond James Upgrade to 'Strong Buy'

Okta shares rise as Raymond James says the company 'should regain its wings.'

Okta  (OKTA) - Get Okta, Inc. Class A Report jumped Wednesday after a Raymond James analyst declared "this fallen angel is finding its wings" and upgraded shares of the identity-verification company to strong buy from outperform, while boosting his price target to $310 from $300. 

Shares of the San Francisco company were climbing nearly 6% to $262 on Wednesday.

Analyst Adam Tindle said in a research note that "this year has been a perform storm of negativity" for the company.

"While the market has punished the stock, Tindle said, "our work via proprietary surveys at recent industry events, and strategic discussions with senior channel executives suggest this former angel has fallen far enough."

Tindle said Okta "should regain its wings" through such factors as an acceleration of core organic trends and an inflection in the adjacent CIAM (Customer identity and access management) market.

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The analyst also cited re-rating in valuation on core acceleration alongside 2H21 beta products in PAM (Privileged Access Management) and IGA (Identity Governance Administration) where checks suggest customer desire for consolidation.

In May, Okta's shares tumbled after the company posted a wider first-quarter loss and announced the departure of Chief Financial Officer Mike Kourey.

Tindle said that "recent senior hires indicate a strong talent pool for an imminent new CFO."

Okta announced in March that it was acquiring its rival Auth0 for $6.5 billion in stock.

"We believe that OKTA is currently undervalued, brought down by the recently announced Auth0 acquisition and product announcements which have understandably left some investors questioning if core growth is slowing and if adjacent markets may distract the company," the analyst said.

The company is scheduled to report second-quarter earnings on Sept. 1.